Competitive and marketing analysis of Zomato PDF

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A REPORT ON CASE ANALYSIS OF ZOMATO

Submitted To: Dr. Neeraj Singhal, Assistant Professor, Strategic Management, MDI Murshidabad

Submitted by: The Academic Group B4 Ashish Srivastav (20PGPM082) Barsha Singh (20PGPM086) Neha Chaudhary (20PGPM107) Promit Singh Rathore (20PGPM111) Soudeep Kumar Ghatak (20PGPM124) Saurabh Kumar (20PGPM119) Tridip Kumar Dutta (20PGPM129)

ACKNOWLEDGEMENT We would like to express our deep gratitude to Dr. Neeraj Singhal, Assistant Professor, Strategic Management, MDI Murshidabad for his invaluable support, enthusiastic encouragement and valuable guidance throughout this report. We extend our gratitude to the Management Development Institute, Murshidabad for providing us this golden opportunity that will enable us to take our country to a higher level by doing a lot of creative and innovative work. We would also like to thanks our friends and parents for their continuous support and encouragement throughout our report.

CONTENTS 1. INTRODUCTION

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2. STRATEGIES IDENTIFIED IN THE ORGANIZATION

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3. EXTERNAL ANALYSIS

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a. CPM

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b. SWOT

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c. EFE MATRIX

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d. PORTER’S FIVE FORCES ANALYSIS OF ZOMATO

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4. INTERNAL ANALYSIS a. IFE MATRIX 5. STRATEGY ANALYSIS

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a. IE MATRIX

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b. TOWS MATRIX

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c. STRATEGIC GROUP MAPPING

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d. STRATEGIC CANVAS

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e. CORE COMPETENCIES

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6. VALUE CHAIN ANALYSIS OF ZOMATO

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a. PRIMARY ACTIVITIES

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b. SUPPORTIVE ACTIVITIES

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c. COST LEADERSHIP

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d. DIFFERENTIATION

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e. VALUE CREATION, CONFIGURATION AND CAPTURE

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7. CONCLUSION

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1. INTRODUCTION Zomato started as Foodiebay.com in 2008 by the co-founder Mr. Deepinder Goyal who is a post-graduate alumnus of IIT Delhi and Pankaj Chaddah who is also an alumnus of IIT Delhi. It started off initially in the NCR region of Delhi and then later expanded its reach Bangalore, Kolkata, Mumbai and Pune. As it was facing issues from ebay.com, in 2010 it changed its name from Foodiebay.com to Zomato.com. They later expanded to Hyderabad and Chennai in 2011, and shortly after launched their app on Android, iOS and Microsoft platforms. It extended its reach to 24 countries and more than 10,000 cities by the year 2019. Vision and Mission Statement: Zomato has no formal Vision or Mission statements which are declared. But the co-founder and COO of Zomato, Mr. Pankaj Chaddah once said, “We want to be the 'Google' of food. Our vision is to be the global platform when someone is looking for food locally”. We can infer from the above statement that their vision is, Zomato wants to be a global leader in the food business. And to achieve this they want to change how people eat, which is the mission. We can say that there are 3 components of the mission of Zomato. 

Changing how people eat



Improving the Quality of food, and



Food Hygiene Ratings to help people choose better

In this analysis we aim at doing both Internal and External Analysis of Zomato, and identify the key strategies and competencies of it.

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2. STRATEGIES IDENTIFIED IN THE ORGANIZATION Zomato has made use of a variety of strategies to become the industry leader and to leverage its core competencies to the fullest. By timing the entry correctly, it has been able to capture the market share early and then retain its customers. For tackling the entry barrier and acceptability in various countries it had acquired other companies which already existed there, and in many other countries it used normal expansion. With its focus on Assortment, Accessibility, Affordability and Quality, it has been able to gain a very good market reputation. Apart from these, Zomato also makes use of the following strategies: 

Zomato Gold Subscription Program



Zomato White Label



Social Media Marketing

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Trendy taglines and messages

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Choosing the right target audience



Alliances (Ola, Uber)

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Zomato Provisions

All these strategies have been critical to the success of Zomato throughout the years.

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3. EXTERNAL ANALYSIS (COVERING OPPORTUNITY, THREAT, EXTERNAL FACTOR EVALUATION MATRIX, COMPETITIVE PROFILE MATRIX) a) Competitive Profile Matrix:

In the competitive profile matrix, we have compared Zomato with two if its biggest competitors in India, i.e., Swiggy and Food Panda. The critical success factors were identified as Market Share, Market Reputation, Marketing, Customer Loyalty, Innovation, Customer Service, Market Penetration and Offers. By assigning the weights to these factors and calculating the weighted scores for each company, we found that Zomato had the biggest score of 3.75 followed by Swiggy which had 3.6. Food Panda had the least score of 1.35, implying very less threat. Hence, we can say that Zomato is the market leader and has a very tight competition with its competitor Swiggy, in India.

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b) SWOT Analysis of Zomato: Before moving on to EFE and IFE matrix, it is important to do a SWOT analysis which will form the base for both of them. Hence, let’s take a look at the SWOT analysis of Zomato.

We evaluated the external factors, i.e., Opportunities and Threats, with the help of EFE matrix. Let’s take a detailed look at the External factors: Opportunities: 

Zomato is already present in 24 countries. But as it aims to become a global leader, it has to expand its reach all over the globe. There are many emerging markets with opportunities, and Zomato can tap into these markets.



To tap into these markets, Zomato can do acquisitions which will help it to enter them. It can also look at acquisitions to improve its forward, backward and horizontal Integration.



Zomato has also started web shows, which can be its step towards the entertainment sector, which can provide many opportunities for growth in future.

Threats: 

The biggest threat in the food delivery business is of course, the competitors. Competitors like Swiggy can become a big threat if left unchecked.

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

Another threat is the controversies that Zomato gets into. This can hamper the reputation which is a very critical success factor.



Economy and Political Factors are also important as they affect the company in numerous ways. Economy dictates how the markets behave, whereas politics can determine the laws or ease of doing business.

c) External Factor Evaluation Matrix:

So, based on our evaluation from the EFE matrix, Zomato got a total weighted score of 3.8. This score will be further evaluated in the IE Matrix.

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d) Porters Five Forces Analysis of Zomato:

 Threat of New Entrants is low due to the high infrastructure cost involved and as the market is almost a duopoly with Zomato and Swiggy capturing almost 95% of the market share in the food delivery market in India.  The Threat of Substitution is high due to lot of similar apps and the ease of shifts as the customers can compare the prices and services, and if they don’t like an app, they can shift to another one.  The Bargaining Power of Customer is high as the market is price sensitive, outside food being not being a normal good.  The Bargaining Power of Supplier is Medium to High, as they are dependent on suppliers, but many suppliers are present.  Competitive Rivalry is high due to the high intensity and growing market size.

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4. INTERNAL ANALYSIS (STRENGTH, WEAKNESS, INTERNAL FACTOR EVALUATION MATRIX) We evaluated the Internal Factors with the help of IFE matrix. Before we look at the results, lets take a look at the Internal Factors, i.e., Strengths and Weaknesses of Zomato. Strengths: 

Zomato has the First Mover Advantage in many countries and that has helped it in capturing a Large Market Share and Fast Expansion.



Due to its large market share, Zomato is highly financed by investors and hence it has a very good Financial Leverage.



Its Marketing and Innovation has helped it to become a market leader in the food industry.

Weaknesses: 

Zomato has faced Security breaches before where it lost lot of data to the hackers.

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High Staff Turnover has been witnessed throughout the years.

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Zomato is less known in many countries which can pose a threat to its entry in those markets.

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India has almost 70% of its population residing in rural areas, where Zomato is not there.

a) IFE Matrix

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Based on our Evaluation we got a total weighted score of 2.65 for the internal factors.

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5. STRATEGY ANALYSIS (TOWS MATRIX, IE MATRIX) a) IE Matrix: As we have already seen before, the Weighted Score for Zomato from the EFE and IFE matrix is 3.8 and 2.65 respectively. The X axis of the IE matrix has the total IFE matrix score being 2.65 and the Y axis of the IE matrix has the total EFE matrix score being 3.8. The company's location was in cell 2, suggesting growth and development. The organisation could use this position to implement intensive strategy, such as market penetration, market growth, and product development, or integrative strategy, such as backward integration, forward integration, and horizontal integration.

b) TOWS Matrix:

SO (Strengths-Opportunities): Zomato can us its internal strengths to capitalize on its external opportunities. For example, it can use the First Mover Advantage for Expansion across various countries, use its financial leverage in Acquisitions, and use marketing and innovations in new things like Cloud Eateries and Entertainment.

WO (Weakness-Opportunities): 9

Zomato can improve its internal weaknesses by using external opportunities. Like using Expansion across countries to deal with the low awareness, or using Entertainment as a means to penetrate Rural India. ST (Strengths-Threats): Zomato should make use of internal strengths like its market share to get rid of its competitors. WT (Weakness-Threats): Here we can say that having low penetration in rural areas may aid competitors to tap into those markets. Zomato should look at acquiring those competitors and increase its market reach. c) Strategic Group Mapping: Strategic group mapping is a technique which helps you to take a look at your position in your sector, field or market. It is a tool for analysing competition. Strategic group map helps in defining the scope of firm`s competitors. Here the two key variables chosen are discount given and brand awareness. Market size is considered as a third parameter. The companies taken into consideration are Zomato Swiggy Food Panda Mapping of the companies on two variable grid using different strategic dimensions are performed and these dimensions should not be highly correlated. The competitive factors should be expressed in a low to high range of 1-5. The circles drawn is proportional to the market size. Analysis of the Mapping: Swiggy and Zomato have significant amount of brand awareness and hence lie in first quadrant. In terms of brand awareness Food Panda lies in the middle. In terms of discount offered, Zomato lies in the top followed by Swiggy, whereas Food Panda lies in the bottom. 10

The size of the bubble is marked with the market size of each company.

Strategic Group Map 6

0.5

1

1.5

2

2.5

5

0.6

4

0.35

3 3

3.5

4

4.5

5

5.5

0.04 2 0.01

1 0 Zomato

Swiggy

FoodPunda

Others

Strategic Group Map Brand Awareness Discount Given Market Size Brands

(1-5)

(1-5)

Zomato

5

5

60%

Swiggy

5

4

35%

Food Panda

3

2

4%

Others

1

1

1%

d) Strategic Canvas: 11

In simple terms, a strategy canvas is a line graph that plots functions/factors against relevance for a business or organisation, accompanied by competitors or market benchmarks. In this way, data can be used to aid in the formulation of a strategic strategy. This canvas shows that on the basis of 5 parameters like collaboration with restaurants, Customer relationship, Marketing, Market Share and Innovation on the rating of high medium and low, if we compare Zomato with its competitors like Swiggy and other food deliveries app we can see Zomato is rated high and consistent in all these parameters whereas Swiggy is comparatively lower than Zomato but better than others whereas other delivery apps are far below than these too. All these rating is based on Market reviews present in app or on Google about these companies. In a nut shell we can conclude from this Canvas that Zomato is market leader in food delivery services and enjoys good market reputation than others. Based on the Internal Analysis, we were able to deduce the Core competencies of Zomato. Let’s see what they are. e) Core Competencies

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1. Resilience: When faced with an obstacle, Zomato pushes themselves to the edge of their abilities. When they anticipate uncertainty, they only respond with flexibility. 2. Acceptance: Feedback isn't taken personally; instead, it's broken down into good points and used to improve each and every aspect. 3. Ownership: Zomato employees do not work "with" Zomato; rather, they work "for" Zomato. They approach any issue as if it were their own, accept responsibility, and advocate for improvement. 4. Humility: Currently, ‘us' takes precedence over ‘me.' Zomato does not get caught up in pride or trust over individual accomplishments, but instead focuses on being our authentic self in every way. 5. Spark: Zomato believes in, advocates for, and converts our society, both internally and externally with all of their stakeholders. 6. Judgement: It is their decisions, not their abilities, that reveal who they really are. They hope to instil these rights in the vast majority of cases. Now that we have seen what are the internal strengths and weaknesses of Zomato, and its core competencies and strategies, let’s take a look at how Zomato creates value for its customers with the help of value chain analysis.

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6. VALUE CHAIN ANALYSIS OF ZOMATO a) Primary Activities: Inbound Logistics: Zomato Acquired WOTU (We Organize the Unorganized), which is a Bangalore based raw materials procurement firm, which helps Zomato provide high quality and trusted raw materials to the Restaurants. They focus on doing quality tests, and give ratings to restaurants so that customers can select the quality and hygienic food, thereby creating value for customers. Operations: Zomato provides on demand food delivery to its customers through their app which is available on both android and iOS platforms. They have numerous restaurants listed which are closer to the customer, which help the customer to select from various choices. They also provide other services like cloud eateries etc. Since the revenue model of Zomato is not to charge customers, but restaurants, the customer doesn’t have to pay anything extra. Outbound Logistics: Zomato has a very active and organized delivery network, where it uses its own delivery boys to deliver food from restaurants to customers. They provide seamless delivery to the door step, making life of customer easier. They also have fast delivery options where they can get certain deliveries within 20 mins. Also, you can order on Zomato from anywhere, i.e., from home, office, or from a friends’ home. The payment is also seamless with multiple options of digital payments available. Marketing and Sales: Zomato is known for its trendy marketing practices and it is extensively present on the social media. They never miss an occasion to reach out to their customers with something innovative. Zomato also has its Gold subscription which helps its customers to gain extra benefits, offers and free delivery. This helps Zomato to increase its customer share and number of orders per day, which in turn increases the trust with restaurants.

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Service: Zomato provides various services like Cloud Kitchen, Takeaway services and home delivery, whatever the customer needs are. They have also entered the entertainment industry where the customers can watch web shows while waiting for delivery. b) Supportive Activities: Firm Infrastructure: Zomato invests less in infrastructure as it uses the facilities of restaurants and delivery boys to operate and create value for customers. It is now starting its own infrastructure services, which are the cloud kitchens which will help them to generate more revenues. Human resource Management: Zomato manages its delivery personnel through providing them training and development, and with better earning opportunities which helps Zomato to provide better quality and assured delivery services. Technology Development: Zomato has a strong technology in place which helps in ratings, search and discovery of restaurants, deep tech which helps in estimating the food preparation time, social media team, frequent app updates etc., which provide customers with better experience. Procurement: Like mentioned before, they ensure that the restaurants get good quality of raw materials, and also have restaurant ratings so that the quality of food is transparent to the customers. With the help of the above value chain, Zomato is able to create value for its customers. Now that we have a brief idea of how the value chain of Zomato works, let’s take a look at how Zomato has achieved cost leadership, differentiation, and how it does value creation, configuration and capture.

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c) Cost Leadership Zomato has been able to capture a huge market share in a very quick time. The number of orders has risen from the expected value of 1 million per day to 40-50 million orders per day. This has enabled Zomato to convince restaurants that they provide discounts, so that even though their margins decrease, their overall revenue and profit is improved. This is how they are able to provide their customers with many offers and achieve cost leadership and differentiate themselves. d) Differentiation Zomato has its focus entirely on food and food alone. The entertainment services they provide are related to food. They want to be leaders in the food industry, and to do this they are aiming at changing how people eat. They focus on Hygiene and food ratings to provide their customers with the best quality possible. They also focus on Assortments, Affordability, Acceptability, and Quality (AAAQs), which provides them a competitive edge from its competitors and provides a differentiation. e) Value Creation, Configuration and Capture For Value creation Zomato makes use of its inbound logistics, operation and outbound logistics, where it provides high quality food to the customer, with ease of delivery to their doorstep and options of various payment methods. The marketing and sales is key to getting customers to get start to using mobile or web application. The group of restaurants who sign up with Zomato be...